Tesco was founded by Jack
Cohen; born 1898, he was the son
of East European Jewish migrants, and learnt the hard end of the grocery trade
from the street market stalls of east London.In 1919 Mr Cohen began selling
NAAFI surplus vegetables from a stall in East London, financing this by investing
his £30 serviceman’s gratuity after serving in the Flying Corps. On the first day he made £1 profit.Mr Cohen soon acquired the nickname ‘Slasher Jack’ from the way he
ruthlessly cut grocery prices (see ‘Piggly Wiggly’stores).In 1929 Mr Cohen began selling his
groceries from fixed shops.The name Tesco first appeared on a lock-up store
in Burnt Oak, near Edgware, north London; the company
‘Tesco’ was founded in 1932.The name ‘Tesco’, derived from T E Stockwell
(Jack Cohen’s tea supplier) and Jack Cohen, was first used on tea, in 1924.

In the 1930s, Tesco moved into fixed shop premises in
the new London suburbs, at cheap rents.Mr Cohen opened a second market stall in Tooting, south London, in 1930,
and Tesco stores opened in Becontree
(east London) and Edmonton (north
London) in 1931[1].Note that whilst today these are lower-class
suburbs, in the 1930s they were middle class districts.Mr Cohen’s ambition was to bring cheap
groceries to the moderately affluent, and they loved it.

The move to self-service

1946, Jack Cohen visited the USA and was impressed by
the self-service system at their
supermarkets. This enabled more people to be served faster, with lower labour
costs.In 1950, The Tesco branch
in St Albans, small by 21st
century standards (200 square metres) was the first Tesco to be converted to
self service. This, or the Sainsbury
Croydon branch, also converted to self service in 1950, was the UK’s first
self-service supermarket.

The move to supermarkets

1956, Tesco
opened its first supermarket, in a former cinema at Maldon, Essex.

1961 Tesco opened a 1,600 square metre (sales area)
supermarket in Leicester, which was in
the Guinness Book of Records as the largest store in Europe

1967, Tesco opened a 9,600 square metre store at Westbury, Wiltshire; this was
exceptionally large for its time.

1968 The term ‘superstore’ was first applied to a
Tesco store; to its branch at Crawley,
West Sussex.

The
abolition of RPM (Tescopolitics)

1960s, Tesco
lobbied Parliament to have RPM (Resale Price Maintenance) abolished, its
efforts supported by Edward Heath. RPM had forbidden retailers, who could buy
in bulk, from undercutting the prices of smaller shops, so protecting smaller
retailers. Large retailers such as Tesco got around this by issuing stamps with
purchases, and these stamps could be redeemed for catalogue goods, an effective
discount.

1964, Parliament in the UK passed the Resale Prices
Act, abolishing RPM. By 1979, RPM only remained on books and pharmaceutical
goods.

The Age of Tescopoly

1973. The oil price shock led to a three-day week in
the UK, and a recession. Tesco responded by ditching Green Shield Stamps and
replacing them with lower prices. Green Shield Stamps finally disappeared in
1979.

1979, Terry
Leahy joined Tesco, as a marketing executive.

1982, Tesco first used computerised checkouts. Tesco
had 70 ‘superstores’.

1991Tesco became Britain’s biggest independent
petrol retailer. Offering cheap petrol was one way the supermarkets could
persuade more customers with cars to come and shop there.

1992, Tesco began
opening small format ‘Metro’ stores, the first was at Covent Garden, central London. This was
to catch the office worker and tourist trade, people who might not have the
time to shop at a larger supermarket.

1994 Tesco began opening ‘Express’ stores. The first was on a garage forecourt in Barnes, south-west London.

1994 Tesco launched its Clubcard, a loyalty
card giving shoppers effectively 1% off their shopping bill, or more if
there were special bonus points awarded. These loyalty cards were once seem by
the supermarkets as a way of persuading shoppers to stick with one store, hence
the name, but shoppers simply obtained all the ‘loyalty cards’ going and
continued to use different stores. However the main value of the card to the
shop was that, linked to other electronic data such as credit card addresses,
it gave a detailed profile of shopper habits and preferences, even the times
they shopped. This could be used to target the supermarket’s own direct
mailing, or the information could be sold as a valuable commodity to other
marketers. Also, the cards initially produced more information than the
supermarkets could possibly handle, although rapid advances in computer
processing power are ameliorating that problem. Nevertheless, some stores have
dropped their loyalty cards in favour of the competitive edge of lower prices.

1996, Tesco
overtook Sainsbury in market share to become the UK’s biggest supermarket.

1997, Tesco opened the first of its ‘Extra’ format large stores at Pitsea, Essex. This store had around
10,000 square metres sales area.

1998, Following a deregulation of UK shop opening
hours in 1987, Tesco now had 28 stores
opening 24 hours a day except Sundays, when a maximum of six hours
opening were now allowed.

March 1999,Tesco
now had 83 stores on 24-hour opening.

2000, Tesco launched Tesco.com.

8/2000Tesco now had
230 stores open ’24 hours’.
The 1950 Shops Act had prohibited Sunday opening or shops open after 8pm
on weekdays. Only ‘perishable items’ could be sold on a Sunday. In practice,
small ‘corner’ shops widely flouted this restriction, and local councils turned
a blind eye, but the Act was enforced for larger shops. In any case, what was
‘perishable’ was highly complex to define, and led to anomalies such as it
being legal to sell periodicals, such as pornographic magazines, on a Sunday,
but not books, for example Bibles. The 1950 Shops Act was repealed in 1994, and
Sunday opening allowed for up to 6 hours. Thereafter, many large supermarkets
were open from Monday morning to Saturday evening, and from 10-4, or less often
11-5, on Sundays.

5/2003, TESCO
ENTERED THE TOP TEN OF WORLD RETAILERS.It leapt from no.11 in 2002 to 8th in 2003, due to a series
of acquisitions and worldwide expansion as well as organic growth.Non-UK trade now accounted for 18% of Tesco’s
total sales.

8/2004. Tesco now sold 840 million litres of milk a
year, 12% of all milk sold in the UK.

2/2005, Verdict reported that Tesco had, by end-2004,
a 5% share of local convenience-store food retailing, up 1% in a year; in 1999
Tesco had just 0.9% of neighbourhood food retailing. This put Tesco just behind
the shares of the Co-op (5.5%), Spar (5.4%), and Musgrave (5.3%) (Musgrave has
gained market share by its takeover of Londis). Somerfield had a 3.1% share of
local food retailing.

2/2006Tesco announced plans to open ‘hundreds’ of
convenience stores, similar to its successful ‘Express’ format in the UK, on
the west coast of the USA. UK
retailers have frequently faced difficulties on attempting an entry into the US
market, but anti-monopoly policies in Europe have restricted Tesco’s available
avenues for expansion.The first Tesco
US stores are to open in late 2007 in southern California, Arizona, and Nevada
(Financial Times, 28 June 2007, p.9).Most of the new stores will be in the prosperous suburbs of cities like
Los Angeles, San Diego, Phoenix, and Las Vegas.However some Tesco stores will be in deprived, mainly
Hispanic-populated, inner suburbs, far from existing major supermarkets, where
there are only small independent stores with high food prices.Many of these independent stores will likely
be forced to close, even as the more efficient ones reduce prices and improve
their offering to try and match Tesco.On average, local grocery prices in these deprived neighbourhoods will
fall, but some people may have a longer journey to get their daily foodstuffs. Tesco has acquired many former pubs, which
have been closing at a rapid rate in the UK due to alcohol duties,
drink-driving enforcement, energy costs, and cash-strapped customers, and
turning these into ‘Express’ stores.

12/2009, Tesco
began re-fascia-ing some of its garage forecourt stores to the One-Stop
format.Tesco acquired the One Stop
fascia in 10/2002 when it bought the T & S chain; as detailed below (see Tesco
corporate takeovers and sales), some One Stop fascias were retained, although
under Tesco ownership.There were
suspicions that this would facilitate Tesco charging higher prices at these
smaller stores than if they were fascia-ed as Tesco, since many shoppers are unaware
that Tesco in fact owns One Stop (The Grocer, 19/12/2009, p.10).

The
Empire Stumbles

1/2015, In 2014 Tesco
was shaken by revelations that it had ‘overstated’
its profits, which had already slipped from a peak of £4 billion year
ending February 2012 to £3,3 billion year ending February 2014 (See Supermarket sales and profits). The issue was to do with
enforced discounts, invoice delays and paybacks foisted on suppliers in return
for prime shelf space and other ‘favours’ within Tesco stores. The extra money
Tesco made from these measures was a future stream, on year’s trading to come,
but Tesco had included this money as already-gained profit. This matter was, in
2014, under investigation by the Serious Fraud Office.

Tesco announced, in December 2014, that its profit for year ending February 2015 would
not even attain the £1.9 billion expected in Summer 2014, as Tesco lost share
to the discounters Aldi and Lidl. Instead, a figure of £1.4 billion was now
expected.

Tesco’s shares price,
which had already slipped from a peak of 495p in late 2007 to around 370p in
summer 2013 (as the Credit Crunch persuaded shoppers to migrate to Aldi and
Lidl), then fell to a low of 162.5p in 2014.

In January 2015 Tesco’s new CEO, Dave Lewis, (Sir Terry
Leahy stood down in 2011) announced a
reduction in product range of 30% from the 90,000 lines then offered by a
typical Tesco Extra store. Shoppers, he said, were baffled by 228 choices
of air fresheners or 28 options of tomato sauce, whilst Aldi offered just one
type of tomato sauce, in one size; Aldi sold just 12 types of air freshener.
Tesco sold 98 types of rice (Aldi, 6 options), and 283 kinds of coffee (Aldi,
20). The retail analyst Kantar estimated the average shopper only ever bought
441 different product lines over a year, with 41 separate items in their
average weekly shop. Mr Lewis hired management consultants Boston Consulting to
prune that 90,000 choice down to between 65,000 and 70,000 (a typical Aldi
offers just 2,000 product lines). Tesco had expanded its product range by a
third since 2013; by contrast its main competitors, Asda, Morrison and
Sainsbury had kept their ranges at between 20,000 and 30,000 lines.

Tesco also announced
plans to close 43 loss making stores (18 Express stores,12 Metro stores, 7 superstores, and 6
non-food Homeplus stores), putting 2,000 jobs at risk.A further 49 Tesco stores
planned to open, including some under construction, would now not go ahead; the
loss to the community was not just a supermarket but the jobs, and associated
development of housing units, that was to go with them. Some of these abandoned
store projects involved the restoration of historic buildings, such as a
Victorian hospital in Wolverhampton. It was also to close its corporate
headquarters at Cheshunt, Hertfordshire in 2016, and move to smaller premises
at Welwyn Garden City nearby. These measures would save £250 million a year.

Tesco was facing the
problem that shoppers were moving more towards convenience last-minute small
shopping trips from local stores such as Tesco Express. However Tesco will
then face the issue of too much shelf space in its larger stores; yards of
empty shelves do not look good in a supermarket.

In 2015 Tesco began
cutting back on the number of its large stores offering 24-hour opening
(ca. 400 in early 2015).These stores
catered for shift workers but online shopping and garage convenience stores
also took this trade.

2016, Tesco ceased 24-hour opening at many of its stores.
By June 2016 almost 100 Tesco stores that once had 24-hour opening had ceased
to operate these hours. The riseof the
Internet since 1998, when Tesco began 24-hour opening, was to blame; insomniacs
could just as easily shop at home on their computer now. However in June 2016
some 300 Tesco stores, plus 230 Asda stores*, still ran 24 hours a day, except
Sunday of course. Sainsbury now ran just 4 24-hour stores, and Morrison’s never
ran any 24-hour stores.

*Asda ceased 24-hour opening at 20 stores in 2014.

Tesco’s share price
had fallen from a peak of around 380p in 2013 to a low of 140p in early 2016;
they have since recovered somewhat to around 175p by end-2017.

Small
is beautiful (for Tesco)

2017, Tesco bought Bookers, a large grocery
wholesaler. The Competition Regulator approved the deal in November 2017. It
decided that Tesco did not compete in the catering sector, where 30% of Bookers’
2017 sales were. However other buying groups including Spar and Bestway were concerned.
At the same time the Co-op’s takeover of Nisa
was approved by Nisa shareholders.

1)
UK shoppers are moving away from the once-a-week big supermarket shopping model
and buying more immediate food at smaller outlets where they can pop in for
unplanned meals to be eaten the same day. This is partly due to people
livingin small accommodation where they
don’t have room for a big fridge-freezer.

2)
Catering is a fast-growing UK market, as consumers increasingly opt for food
prepared by someone else, ready to eat at home or to be consumed in a
restaurant.

3)
Tesco will now be able to deliver online orders to over 5,000 UK corner shops;
online shopping is a fast-growing market in the UK. Tesco can also market its
banking and phone services in these shops.

4)
Tesco will add between £2 and £3 billion to its current £45 billion UK grocery
sales, increasing its buying power in the marked and gaining further economies
of scale.

2003 Tesco enteredTurkey and Japan. In Turkey it purchased the Kipa chain,
191 stores in 20 cities, for UK£ 75 million. In 2014 Tesco deferred plans to sell the Kipa chain due to lack of purchase interest; Kipa stores in eastern
Turkey were underperforming.

2004 Tesco enteredChina.

2005,
Tesco exitedTaiwan; its stores were
handed to Carrefour in exchange for Carrefour’s stores in the Czech Republic
and Slovakia, reinforcing Tesco’s already-successful presence in those
countries

2007, Tesco entered the USA.It opened Fresh and Easy stores, the first was in California.However by early 2009 there were signs that
the Fresh and easy format was not doing as well as Tesco first hoped.The Credit Crunch, which began in the US as
households there began to default on over-extended mortgages, did not help; it
was also possible that Tesco researchers had overestimated the balance of fresh
food as against frozen ready meals consumed by US households (see ‘Marketing’,
4/3/2009, p.20).See Grocery Retailing in the USA for further
details.

In 2013 Tesco decided a loss of £1.2 billion on Fresh and Easy was
enough and pulled out.

2008, Tesco began
operating its smaller Express format in China; the first such store was in Shanghai.

2011 Tesco exited from Japan.Problems included the Japanese consumer
preference for small purchases from local shops, and for using vending
machines.

2011, Tesco
announced plans to enter the ‘beauty’ market.Treatments such as leg waxing, make-up advice, tanning, and hairdressing
are to be offered in a move which wpould challenge both Boots and many
independent beauty, hairdressing, salons.Botox and brush-up with your baked beans, anyone?

Tesco store numbers

Year

Store numbers (UK)

Sales area (UK) square metres

Store numbers (non-UK)

Total store numbers

1931

4

1939

100

1955

150

1959

400

1972

790

1974

771

1979

571

1980

532

1983

369

1984

369

1987

377

1990

379

1993

428

1994

416

103

519

1995

519

513

1996

545

566

1997

568

572

1998

618

1999

639

182

821

2000

659

186

845

2001

692

215

907

2002

730

221

951

2003

1,982

309

2,291

2004

1,877

441

2,318

2005

1,780

2,420,000

586

2,365

2006

1,897

2,590,000

775

2,672

2007

1,988

2,780,000

2008

2,115

2,950,000

2009

2,282

3,130,000

2,018

4,300

2010

2,507

3,420,000

2011

2,715*

3,670,000

2,750

5,453

2012

2,979

3,910,000

2013

3,146

4,050,000

2014

3,378

4,180,000

3,384

2017

3,569

657

Year

Store numbers (UK)

Sales area (UK) square metres

Store numbers (non-UK)

Total store numbers

In 2011, 480 of these
stores were under other fascias owned by Tesco but operated as separate
chains: One Stop and Dobbies.

1956, Tesco opened its first supermarket in a former cinema
in Maldon, Essex.

1968 Tesco opened its first superstore, at Crawley, Sussex.

During the 1970s many small inner city stores were closed. They were too small to have adequate economies of scale and
were in areas of low spending power.Of
the 518 Tesco stores of under 500 square metres sales area in 1972, just 190
remained by 1980. However improved computer and distribution technology means
the smaller stores now operated by the main supermarket chains in the 21st
century now can enjoy economies of scale similar to the larger superstores.